Most developed countries and many developing countries are working together to combat the threat of global climate change.
Companies are also addressing this challenge and participating in the emissions trading scheme (ETS).
Sustainable development is the strategic focus of rusal and is integrated into the company’s decision-making process.
The Boguchansky and Taishet electrolytic aluminium plants are under construction and will be projects to produce aluminium entirely from renewable, clean water and electricity.
Aluminium is one of the most energy-intensive industries, and the use of non-fossil energy is crucial: primary aluminium, produced from hydropower, emits 3-5 times less carbon dioxide per unit than coal.
Rusal currently has one of the industry’s lowest carbon emissions targets of about 3.3 tonnes of aluminium.
Rusal spends more than $120 million a year on environmental activities, but the expense also benefits the company: from 2009 to 2012, rusal traded more than 15 million tons of carbon emissions through the Kyoto protocol mechanism and the European Union’s ETS, generating about 11 million euros in revenue.
At the same time, China has made a firm commitment to lead international efforts to combat global warming.
Aluminum is an important part of the national ETS, which is scheduled to launch later this year.
Primary aluminium production currently accounts for 6.5 per cent of the country’s total carbon emissions, and its emissions are growing far faster than the Paris agreement allows: the aluminium industry is set to emit 29 per cent more carbon dioxide by 2020 than it did in 2015, while China’s pledge implies a rise of only 13 per cent.
It is clear that there is a need to pursue specific measures to reduce greenhouse gases in the aluminium industry and green development models, including feasible targets within the framework of the national ETS.
The NDRC has not yet released the final document on the ETS, but the details that have been released so far show that the ETS has some shortcomings, which could reduce its effectiveness and affect the achievement of China’s national climate goals.
China can draw on the valuable experience of the eu’s ETS to help it achieve its ambitious climate goals:
- In order for the ETS to become an effective emission reduction mechanism, it is necessary to set the target value and specify the corresponding value for the ETS participants (enterprises, industries and regions).
Other methods, such as “per unit” targets, do less to reduce emissions.
A reasonable cap on total emissions would allow the aluminium industry to reach its peak in 2020-2021 and comply with national climate commitments.
- The government should have a cross-regional/industry/enterprise database to ensure the transparency of the MRV system.
All mechanisms and data should be transparent and open.
- The impact of ETS on the cost of electrolytic aluminum smelting is approximately us $9-12 per ton of electrolytic aluminum.
That level is not enough to provide an incentive for voluntary greenhouse gas reductions, which cost more than $100 per tonne of aluminium.
As a result, producers of electrolytic aluminum will purchase quotas under the ETS, rather than aggressively pursue emission reductions.
ETS should have a higher incentive for aluminum enterprises to invest in green development.
- Expand the scope of the ETS to include direct emissions from primary aluminum production and convert them into carbon dioxide equivalents.
The quota to be allocated free of charge should be based on the industry’s better performance (currently 1.47 tonnes of carbon dioxide per tonne of primary aluminium).
- Direct emissions from alumina refining are included in the ETS.
Free allocation of quotas should be based on the industry’s better performance.
Over the next decade, the free distribution should be gradually reduced to 30 per cent.
The five recommendations are designed to make the ETS more efficient and transparent.
As a major tool to achieve national climate change goals, the appropriately adjusted ETS will consolidate China’s leading role in addressing climate change.